(AP) ALBANY, N.Y. - A settlement announced Sunday will bring $405 million to victims of Bernard Madoff's historic investment scam, the state attorney general said.

The clients of hedge fund manager J. Ezra Merkin will receive $405 million, and New York state will get $5 million to cover the cost of the settlement worked out by Attorney General Eric Schneiderman. The victims include New York Law School, Bard College, Harlem Children's Zone, Homes for the Homeless and the Metropolitan Council on Jewish Poverty.

Schneiderman called the agreement "a victory for justice and accountability."

"Many New Yorkers entrusted their investments to Mr. Merkin, who then steered the money to Madoff while receiving millions of dollars in management and incentive fees," Schneiderman said. "By holding Mr. Merkin accountable, this settlement will help bring justice for the people and institutions that lost millions of dollars."

Merkin had managed investments for hundreds of investors in four funds: Ariel Fund Ltd., Gabriel Capital L.P., Ascot Fund Ltd. and Ascot Partners L.P. Schneiderman said many of the investors are New York residents and charitable organizations. Many of them requested not to be identified.

Most investors will get more than 40 percent of their losses, but only up to $5 million. Those who lost more could see additional payments, depending on the number of investors who seek reimbursement. Investors will see the terms of the settlement in the next few days, the attorney general's office said.

Merkin used his social and charitable contacts and his reputation as a money manager over two decades to raise more than $4 billion from investors, many of them charitable groups. Schneiderman said Merkin concealed Madoff's role through misleading documents and quarterly reports.

Bernie Madoff

CBS

Madoff, once the Nasdaq chairman, used his reputation and savvy to dupe sophisticated investors, regulators and Wall Street banks. Merkin invested more than $2 billion with Madoff, who used money from new investors to pay returns to previous clients.

A Schneiderman spokesman said he can't speculate on the effect of the settlement on other investors who lost millions of dollars.

A Manhattan judge in September noted that the plaintiffs had cited testimony by Merkin that he was aware of a number of people who were suspicious of the returns Madoff claimed to achieve.

Madoff confessed in December 2008 that he was running a multi-decade Ponzi scheme and that more than $65 billion he claimed to have on hand for investors had dwindled to a few hundred million dollars from an original investment of about $20 billion. He pleaded guilty to fraud and is serving a 150-year prison sentence in Butner, N.C.